Chevron Corporation

Operator: Good morning. My name is Katie, and I will be your conference facilitator today. Welcome to Chevron Corporation's first quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded. I will now turn the conference call over to the Head of Investor Relations of Chevron Corporation. Please go ahead. Unknown Speaker: Thank you, Katie. Welcome to Chevron Corporation's first quarter 2026 Earnings Conference Call and Webcast. I am the Head of Investor Relations. Our Chairman and CEO, Michael K. Wirth, and CFO, Eimear P. Bonner, are on the call with me today. We will refer to the slides and prepared remarks that are available on Chevron Corporation's website. Before we begin, please be reminded that this presentation contains estimates, projections, and other forward-looking statements. A reconciliation of non-GAAP measures can be found in the appendix to this presentation. Please review the cautionary statement and additional information presented on slide two. With that, I will now turn it over to Michael K. Wirth. Michael K. Wirth: Thank you, and welcome to your new role. This quarter, Chevron Corporation delivered solid performance driven by disciplined execution and a resilient portfolio. Despite market volatility and heightened geopolitical tensions, our people remain focused on safely delivering the reliable energy the world needs. Our approach remains consistent. Maintain capital and cost discipline, generate strong cash flow, and deliver superior shareholder returns. Chevron Corporation’s fundamentals are strong. We have a world-class portfolio of upstream assets with peer-leading cash margins, and we are carrying strong momentum into the second quarter, with U.S. production over 2 million barrels of oil equivalent per day, Gorgon and Wheatstone LNG running at full rates, 1 million barrels of oil equivalent per day, and U.S. refineries operating at record crude throughput. The unique combination of Chevron Corporation’s industry-leading refining complexity and our diverse waterborne equity crudes from TCO, Guyana, the Permian, Venezuela, and Argentina creates opportunities for value capture through integration. Our high-quality upstream and downstream portfolios delivered significant integration benefits during the quarter. We maintained strong supply into tight markets and maximized margins across products, including fuel oil, sulfur, and other secondary products which saw significant price dislocations. We continue to optimize flows across our value chains to maintain high utilization and reliable supply into the market. In the second quarter, we expect global equity crude throughput to more than double year over year to 40%. In Asia, we anticipate over 80% refinery utilization. Moving to Venezuela, we continue to leverage our deep expertise and long-standing position to create an option for the future. Two weeks ago, we announced an asset swap with PDVSA. The agreement increases our position in the Orinoco. Ayacucho 8 expands our contiguous acreage position with PetroPR, offering operating and development synergies along with long-term growth potential and optionality. PetroIndependencia is a joint venture we have been in for more than 15 years, where we have increased our equity stake to 49%. Current operations are running smoothly. We are still in debt recovery mode and expect Venezuela to continue to represent 1% to 2% of cash flow from operations. This transaction is expected to improve resource depth and integration upside, supporting potential growth into the future. Now over to Eimear P. Bonner to discuss the financials. Eimear P. Bonner: Thanks, Mike. For the first quarter, Chevron Corporation reported earnings of $2.2 billion, or $1.11 per share. Adjusted earnings were $2.8 billion, or $1.41 per share. Included in the quarter was a $360 million charge related to a legal reserve. Foreign currency effects decreased earnings by $223 million. Organic CapEx was $3.9 billion in the quarter, consistent with historical CapEx trends of lighter spending in the first half of the year. Inorganic CapEx was approximately $200 million. We expect to finish within full-year capital guidance. Adjusted first-quarter earnings were $440 million lower than last quarter. Adjusted Upstream earnings increased due to higher realizations, lower DD&A, and favorable OpEx and tax impacts. Adjusted Downstream earnings decreased primarily due to unfavorable timing effects, which were partly offset by higher refining margins. Unfavorable timing effects totaled around $3 billion for the quarter, reflecting a steep rise in commodity prices in March. The effect was evenly split between inventory valuation and mark-to-market accounting on paper derivative positions linked to physical cargoes. We anticipate approximately $1 billion of the paper positions to unwind in the second quarter, with the majority of related cargoes delivered in April. Looking forward, we would expect additional timing effects when prices are rising, and further unwinds when prices are falling. Chevron Corporation generated cash flow from operations, excluding working capital, of $7.1 billion in the quarter. This includes unfavorable impacts from special items and timing effects totaling approximately $3 billion. Adjusted free cash flow was $4.1 billion for the quarter and included a $1 billion loan repayment from TCO. Share repurchases were $2.5 billion, in line with guidance. Working capital was impacted by sharp commodity price increases as well as a build in inventory. Consistent with historical trends, we expect an increase in working capital in the first half of the year and a release in the second half, the extent of which will be primarily driven by prices. Over the period, more than $5 billion in commercial paper was issued to manage liquidity and general business needs. About half has already been paid down in April, and we expect these short-term balances to decline further throughout the second quarter. First-quarter 2026 oil-equivalent production increased by approximately 500 thousand barrels per day compared to 2025. This reflects the integration of legacy Hess assets in addition to continued organic growth across the portfolio. The conflict in the Middle East had a limited impact on production in the quarter, with less than 5% of our portfolio located in the region. In the Partitioned Zone, we are operating at near minimum rates to manage storage. In the Eastern Mediterranean, both Tamar and Leviathan are operating at full capacity. During the quarter, we continued to execute key expansion projects, completing the offshore scope for both the Tamar optimization project and the Leviathan third gathering line. Let me close by reinforcing that despite changes in the external environment, we are executing our plan with discipline, consistent with our long-standing financial priorities. This disciplined approach gives us resilience during periods of volatility, and the ability to invest and return cash to shareholders through the cycle, all while ensuring we maintain a balance sheet built for the long term. Chevron Corporation’s business is strong, and our 2026 guidance is unchanged. Capital spending and production outlooks are consistent with previous guidance, and we are on track to deliver our $3 billion to $4 billion structural cost reduction target by year end. This consistency underpins our 2030 targets shared November 9, including over 10% growth in adjusted free cash flow and earnings per share and 3% improvement in ROCE, all at $70 Brent. These are not aspirational goals. They are grounded in assets that are operating today, a more efficient organizational model, and continued capital discipline. I will now hand it back. Unknown Speaker: That concludes our prepared remarks. Thank you, Mike and Eimear. As a reminder, additional guidance can be found in the appendix of the presentation, as well as in the slides and other information that is posted on chevron.com. We will now open the call for questions. We ask that you please limit yourself to one question, and we will do our best to get all of your questions answered. Katie, please open the lines. Operator: If your question has been answered or you wish to remove yourself from the queue, please press 2. If you are listening on a speakerphone, please lift your handset before asking your question to provide optimum sound quality. Again, if you have a question, please press 1 on your touch-tone telephone. Our first question comes from Neil Singhvi Mehta with Goldman Sachs. Neil Singhvi Mehta: Janine, you know, Mike, I would love your perspective on the current conflict in the Middle East and if you could share how you think about this in the context of your four-decade history in oil and gas and how significant of a moment this is. What do you think the long-term implications are of the current conflict? And I know at the Analyst Day in November, we talked about a flat nominal $70 Brent as a mid-cycle planning assumption, but does this event change the way you think about mid-cycle pricing? Michael K. Wirth: Thank you, Neil. This is clearly a very significant disruption to the global energy system. It is a scenario that we have thought about and included in some of our planning exercises for many, many years. It is early to have firm conclusions about how the energy system will change in the long term. I do think there will be changes, but we have to see how things play out over the coming weeks, hopefully not longer than that, as this comes to some sort of a resolution and the energy system begins to be reconstituted and reach some new equilibrium. I think that new equilibrium will look different than what we have known before, but I could not argue with a lot of confidence that I could describe exactly what that looks like. One thing you can expect from us is consistency. You will see capital and cost discipline no matter what. You will see us invest in highly competitive assets with scale and longevity, no matter what—assets that are low on the cost curve. You are going to see us invest to drive strong returns and free cash flow, and maintain a strong balance sheet so we can create predictable and growing shareholder distributions. We have great visibility through 2030. Eimear just reiterated our guidance, and we have assets online now that deliver predictable, visible cash flow growth for the balance of this decade, and we have a full hopper for beyond that. The things that Eimear talked about—consistency, discipline, the strength of our portfolio operating today—are all characteristics that will underpin our strategy going forward. As we see how this is resolved and what the energy system begins to look like post-conflict, if we want to fine tune that at all, we will come back and talk to you about it. It is early for anything concrete other than to reiterate the things that in my 44 years have stood us in good stead through unexpected events and cycles. Thank you. Operator: Thank you. We will take our next question from Arun Jayaram with JPMorgan. Arun Jayaram: Mike and Eimear, it feels like one of the key themes from the print is the opportunity for Chevron Corporation to optimize margins from the refining system as well as your increased exposure to waterborne crudes post the Hess merger. I am looking at slide four and wondering if you could help us think about the value-capture opportunities and maybe the experience in 1Q. How should we think about this integration favorably impacting your go-forward earnings power? Michael K. Wirth: Thanks, Arun. As part of the organizational changes we made last year, we set up a global enterprise optimization team. They have the remit across all of the upstream and downstream to be sure that we are getting maximum value out of the entire set of assets, and we are integrating where it makes sense. They did a really nice job in the last quarter of keeping our system operating at high degrees of utilization and capturing good margins through volatility. Our portfolio provides options to move things around in times like this. Our refineries in Asia are all in various types of ventures. We expect those to run over 40% Chevron Corporation equity crude in the second quarter, much higher than under normal market conditions, and probably much higher than we will see in some of the other refining assets in that region, because we have the ability to direct equity flows to those refineries at a time when access to crude is very important and very difficult. In the U.S., we are operating over 50% equity crude throughput, some refineries much higher than that. We used the Jones Act waiver to move crudes from the Gulf Coast around to the West Coast. In Asia, in the first quarter, we ran CPC Blend, Mars, and WTI, all in our GS Caltex refinery in South Korea. For reference, when I used to run our downstream business, we were about 15% equity crude into our refining system and 85% crudes from the market. As I said, we expect to be over 40% in Asia, north of 50% and much higher at some refineries in the U.S. That is a significant change from our history. At a time when margins are likely to move back and forth across the value chain, whether in the upstream or the downstream, we are going to be able to capture those with a much higher degree of confidence. Importantly, in a world that is getting very tight on products, we are going to keep our assets very full and be able to provide significant supply into markets that dearly need it. We are not going to quantify the value that we are capturing, but I think you will see it flow through in the numbers. It is meaningful and continuing already into the second quarter and likely beyond. Thank you. Operator: Thank you. We will take our next question from Devin J. McDermott with Morgan Stanley. Devin J. McDermott: Good morning. Thanks for taking my question. Eimear, in your prepared remarks, you highlighted Chevron Corporation’s long-standing and consistent financial priorities. I wanted to build on that a bit and get your latest thinking on capital allocation at higher prices and the balance between shareholder returns, building cash, and growth. You left the buyback range unchanged quarter over quarter, which makes a lot of sense. On the growth spending side, what would you need to see to shift spending, maybe add some capital in the Permian and move away from the plateau back toward growth in that asset? Eimear P. Bonner: Thanks, Devin. It comes back to staying consistent with our four financial priorities and being really disciplined through volatility. Today, we are not changing any of our capital allocation framework. We are not changing ranges, and we are happy with where we are. To recap: first, growing the dividend. This year, we grew it for the 39th consecutive year. Second, investing in the business in the most capital-efficient way. Our budget is $18 billion to $19 billion for the year, and we are on track. Our capital performance is really strong. With that capital, we are going to grow 7% to 10% production this year, so we are reconfirming that growth. Third, the balance sheet. It is in great health and will get stronger with higher cash generation. Fourth, the buyback, staying within the $2.5 billion to $3 billion per quarter range. With only eight weeks into the conflict, as Mike said, it is too early to have a different view on the fundamental outlook around price or to see whether it is structurally changing. When it comes to capital allocation, we are comfortable with where we are, and we are staying consistent and disciplined. Thanks, Devin. Operator: Thank you. We will take our next question from Doug Leggate with Wolfe Research. Doug Leggate: Thank you. Good morning, everyone. Mike and Eimear, I wonder if I could follow up on Devin’s question and ask for a little bit more color around two specific assets. You had some changes in Venezuela, Mike. My understanding is that has been essentially recycling cash flow to maintain the business and pay down legacy debt. Are you at a point now where the fiscal terms have changed, the security situation is different, and you would be prepared to incrementally put more capital to work? I would ask the same question of the Permian, where you had a growth story, then stabilized it. In both areas, there might be a call for incremental oil production longer term, and you are in a strong position to deploy capital if you did. So it is a capital increase question, but specific to those two assets. Michael K. Wirth: Doug, number one, we are operating now, as I mentioned in my prepared remarks, with TCO greater than 1 million barrels a day, the Permian solidly above 1 million barrels a day, the Australian LNG facilities running at full capacity, and the Gulf of Mexico. The big pistons in the engine are firing, and as we come into the second quarter, we have tremendous momentum across the system. Production in the second quarter is expected to be higher than in the first. Eimear reiterated 7% to 10% production growth guidance for the year. We have strong growth in the business right now, and we have a portfolio that presents options. As Eimear said, it is early into this conflict to be making big changes. We do not know how things will be resolved. You could build a scenario where things get resolved quickly, the strait reopens, and we get back into a market that is well supplied. You can build another scenario where this goes on, the market is tighter, and it looks different on the other side. We are not going to make rash or immediate changes to a system that is running at a high degree of capital and operating efficiency today. It is really important to stay focused on reliability and safety at a time like this. Specific to Venezuela, your understanding is right. We are still recycling cash flow. We still have debt to recover. We are recovering at a faster rate in this kind of price environment, and there are indicators of positive developments in the country, but there are still questions. Fiscal terms are not clear. There are ranges they have indicated for taxes and royalties. There are still things that need to be addressed relative to dispute resolution, etc. We will continue to operate in the mode we are in now, which has yielded some growth over the past couple of years and in fact this year. We need to see further progress before we would put more capital to work. We have a lot of resource there and could grow it. In the Permian, we are running to deliver strong free cash flow right now. We could accelerate and begin to grow it again, but I do not know what the future looks like. The value we are seeing in improved asset reliability and reduced loss production to downtime is very real, and we get that because we are so focused on it. A quick shift to more production growth might dilute that focus. We will update you over time if our view changes. For now, it is steady as she goes. Operator: We will take our next question from Stephen I. Richardson with Evercore. Stephen I. Richardson: Thank you. Mike, I was wondering if you could talk a little bit about the exclusivity agreement with Microsoft on the power projects. You have been at this for a while with a different type of counterparty in a different industry. Could you update us on time to clarity on contracts, FID, and those items? Michael K. Wirth: It has been reported—and we have confirmed—that we are in exclusive discussions with Microsoft right now. We are very pleased to be in those discussions with such a high-quality customer. It is a company we know well. They have been a partner of ours for a long time, our primary cloud provider, and a key technology provider to us for many years. We have a deep and very good relationship. The project we are advancing in West Texas is progressing well. We have submitted an air permit. We have secured not only the large turbines that we have talked about before, but also small block generation that is useful in early scale-up and for reliability. We have selected an EPC who is doing engineering work. We have agreed with a water provider, etc. We are advancing the project with a lot of pace, and we are beginning to take delivery on turbines this year. Subject to definitive agreements—which we are negotiating—we will move towards FID later this year. We expect to deliver a project with speed and scale that is differentiated. We will remain disciplined on returns. The negotiations thus far look like we can find a place to meet where Microsoft’s expectations on power prices and our expectations on return on investment can both be satisfied. We will likely have more to say on the next call. Operator: Thank you. We will take our next question from Biraj Borkhataria with Royal Bank of Canada. Biraj Borkhataria: Thanks for taking my question. I wanted to follow up on Venezuela. The situation is evolving quite quickly. At the start of the year, comments from the U.S. administration were essentially around all the companies not looking backwards at the receivables balance and looking forward. More recently, you and some of your peers have been talking about the potential to get some of that paid back. How should we think about a reasonable timeframe to assume you get your couple-billion-dollar receivables balance back? Michael K. Wirth: Biraj, we came into the year with, in round numbers, something close to $1.5 billion in a receivable. The rate at which that gets paid down is a function of price, and we are receiving it faster this year than last year. I think we will still carry some sort of balance as we get to the end of this year, but much lower than where we are at present. I think that would probably be fully paid off at some point in 2027. Subsequently, we would update you on the model for cash distributions going forward. By the time we get to 2027, some of the open questions I referred to—tax, royalty, contract terms, etc.—are likely to be clarified, and we will be able to give more guidance on potential capital investment. In any scenario, we remain the advantaged incumbent with people on the ground, operations, supply chains, and contract resources that put us in a very good position to be a big player there, presuming we see further progress. Operator: Thank you. We will take our next question from Sam Margolin with Wells Fargo. Sam Margolin: Good morning. Thank you for taking the question. In the near term, there are extraordinary things happening. Localized shortages could start to become an issue in some of the places that you operate. Chevron Corporation is exposed to these kinds of idiosyncratic market and volatility events, not just in operations but also in the way you manage the supply chain. In the context of the timing effect in 1Q and the derivatives exposure, has anything changed, or are you adjusting your operating posture within this highly volatile environment? Michael K. Wirth: Sam, it is an unusual environment. We have experience working in unusual environments. In 2020, we saw the inverse with the collapse of demand and excess supply. In 2022, we saw a version of this when the conflict in Ukraine began. We have a playbook to deal with these things. You work on optimizing supply into these markets, look at financial exposures and counterparty circumstances, and manage risks. The timing effects that were reported are the kinds of things you expect in a market like this and the kinds of things we have seen before. There was a big run-up in crude over the course of the quarter. Things that normally do not really appear relative to derivatives become very evident in a market like that. In a market that goes the other way, you see those effects reverse. I would not overreact to anything in our numbers. We are very focused on supply in the markets. In Asia, where there are clearly near-term stresses, we are working to keep our refineries running at what I would argue is the highest degree of utilization out there because we can direct crude into those refineries. We can take crudes that would normally go into our U.S. refineries—we have good substitutions—and move other crudes we have access to into Asia. We are very sensitive to trying to maintain supply into tight markets and to implications for customers and counterparties. It is a dynamic situation, but we have an organization that is very experienced in managing through these unpredictable and dynamic markets, and I am very confident we can manage those exposures well. Operator: Thank you. We will take our next question from Betty Jiang with Barclays. Betty Jiang: Good morning, Mike and Eimear. Thank you for taking my question. I want to ask about TCO. In your prepared remarks, you mentioned that TCO is producing above 1 million BOE per day, so that is above nameplate capacity and coming back from disruptions in 1Q. Can you speak to where that asset is performing, what is driving that outperformance, and maybe the debottlenecking opportunities? While on this topic, could you give us an update on the renegotiation contract conversations? Michael K. Wirth: Sure, Betty. TCO returned to full service in March following repairs on the electrical system in February, and there were some adverse weather dynamics in the Black Sea in early March. We have two out of the three single-point moorings available at CPC, with the third one later this year. With two, we can handle full flow on the pipeline. The pipeline is running full. The plant is running full. We have done a lot of maintenance work over this last period, and we expect the plant to be near full availability for the remainder of this year. You mentioned the debottlenecking work we did late in 2025. We have that running in its new configuration. Early performance has been very encouraging. We do not have enough run time yet to give specific guidance. We need more operational data, but you can expect an update on the next call. At times like this, when the market signals are to run assets as strongly as possible, that is what is happening at TCO. We continue to see the benefits of a centralized control center optimizing all the different generations of processing capability and finding white space to squeeze more production through those assets. It is a very complex optimization, and we have new tools to do that in ways we never had before. On the concession, we are making good progress in the discussions. We are working closely with all partners in the venture and the Republic. Technical and commercial teams have been established, and all partners and government representatives are actively participating. This has ensured we keep everyone aligned and proceeding on the same path. It is moving along, and at some point later this year, we will give you an update. This is a venture creating enormous value for all stakeholders—partners and the Republic—over the last 33 years. We are looking for a solution that will continue that history. Final point on TCO overall: our guidance of $6 billion in free cash flow this year at $70 Brent is unchanged, and that accounts for the operational issues in the first quarter and what we are seeing today. At higher prices, we will see stronger than that. Thanks, Betty. Operator: We will take our next question from Lucas Oliver Herrmann with BNP Paribas. Lucas Oliver Herrmann: Thanks very much. Touching on the LNG business briefly, the market is tighter. How much flex do you have across your portfolio to take advantage of arbitrage or other opportunities that may be emerging, and how much production is not effectively committed? Michael K. Wirth: Thanks, Lucas. We ended last year with an LNG portfolio of about 16 million tons per year, the majority out of Australia. We have 40 Tcf of resource and access to strong and growing demand in Asia. Globally, our portfolio is about 80% long-term oil-linked contracts and about 20% exposed to the spot market. We like that over time. Coming into this year, with expectations for length in the LNG market, people would have said that is a good place to be. When spot prices get very strong, you would like to have more spot, but we have to look our way through cycles. Our oil-linked contracts have a lag, so they do not show a lot of the current market environment in the first quarter. You can expect in subsequent quarters that you will see that flow through into pricing on about 80% of our volume. The 20% sold under spot contracts is seeing the kinds of prices you have observed. We just sold our first U.S.-based cargo, and that will grow by 2030 to another 4 million tons per annum, taking us up to 20. That cargo was sold into Europe on spot-based prices. Our portfolio is running very strongly—Wheatstone and Gorgon at full rates, same in West Africa. We are seeing the benefits of this, with the proportions as described. Operator: Thank you. We will take our next question from Manav Gupta with UBS. Manav Gupta: Good morning. I wanted to shift to chemicals. Globally, we are seeing naphtha crackers run dry because there is not enough naphtha. Your portfolio is very U.S.-centric, with a bit in Korea at GS Caltex, but mostly capacity is in the U.S. We are hearing pushes for a $0.20 per pound polyethylene price hike. We ended fourth quarter at record low historic margins, but February could be over mid-cycle. Can you talk about that and how you benefit? Michael K. Wirth: Sure, Manav. Our exposure to petrochemicals is primarily through Chevron Phillips Chemical, and also some through GS Caltex in Korea. CPChem is tilted toward ethane-based cracking in North America and some in the Middle East. GS Caltex’s liquids cracking is derived from its own refining flows and is not reliant upon naphtha supply out of the Middle East. We have seen strong price moves, particularly in the olefins chain, which is where most of our exposure is. Those price moves are predominantly here in the second quarter, so you do not see much of that in the first quarter. Chain margins have significantly improved from very low levels last year to what now are likely better-than mid-cycle chain margins. For assets up and running in parts of the world where you are cracking advantaged feedstock—certainly North America ethane fits—you should see pretty good margin capture in those businesses. Operator: We will take our next question from Jean Ann Salisbury with Bank of America. Jean Ann Salisbury: Hi, good morning. I wanted your latest thoughts on the Bakken—whether initiatives to lower costs have given you more conviction that it is core in your portfolio, and whether higher oil prices have increased interest from others in owning that asset. Michael K. Wirth: The Bakken assets have been running well. We have said you should expect to see a couple of hundred thousand barrels a day production there at a plateau. First quarter was a little bit below that, primarily due to weather effects. We brought down the rig count, running three rigs now versus four previously. We are drilling longer laterals, and we think we can sustain production that way, fully utilize existing infrastructure, and drive strong free cash flow. We are applying best practices from our portfolio and bringing in some from Hess, like we did from Noble and PDC. This is a more liquids-weighted position in shale, and with strong liquids pricing, it performs very well. We have had interest from others since we announced and closed the deal. We want more operating data and to really understand the asset. We underestimated the quality of the DJ when we acquired Noble; thankfully, we did not sell it quickly. Here, we want to fully appreciate the value we have in the Bakken. For example, we are testing advanced chemicals to improve recovery in the Bakken—things we have been doing in the Permian and DJ. Early response looks good. To the extent we can improve recovery and value on that asset and do some things that are not available to others, we should be able to drive more value than a buyer potentially could. It is performing very well. We are in no hurry to do anything other than improve it. In due course, like every asset, we ask how it fits for the long term, but it is premature to ask that today. Operator: Thank you. We will take our next question from James West with Melius Research. James West: Good morning, Mike and Eimear. I wanted to dig in on your Eastern Mediterranean assets. Given the conflict near that region, those assets are much more valuable at this point. As we think about Leviathan, Tamar, which you operate, and Aphrodite, which you are involved in, how are you thinking about those assets going forward, given the need for natural gas in the region for energy security and other reasons? Michael K. Wirth: Broadly, I agree. We have liked these assets from the start. That is why we are investing in expanding production at both Tamar and Leviathan, making good progress on those projects, with some ramp-up this year of another 600 million cubic feet per day of production on a 100% basis, and a longer-term expansion of Leviathan underway—we took FID in January and are excited about that. We have begun FEED work at Aphrodite. This is high-quality, clean, biogenic gas. Demand in the region continues to grow. Supply reliability everywhere is a priority. The markets we are feeding are growing, and the quality of the resource is very high. The quality of the assets—credit to Noble—continues to impress us as we look at expansions and the way they were engineered and designed. We view the Eastern Med as an area with growth potential. We have exploration activity there. Think of it as a big gas hub with a lot discovered and more to be discovered. We are pleased with our position and you can expect us to continue with exploration and development opportunities over time. Operator: We will take our next question from Bob Brackett with Bernstein Research. Bob Brackett: Good morning. You mentioned that Chevron Corporation has a playbook to deal with supply shocks. Governments also dust off playbooks during supply shocks. What policies are helpful during a supply shock, and which are perhaps unhelpful? Michael K. Wirth: You are right, Bob. There are policies that are helpful in responding to a circumstance like this, and those that are not. Broadly, we have a supply challenge in the world, so policies that encourage, enable, and facilitate the ease of supply are helpful. Examples: releases of strategic reserves put oil into the market that would not otherwise be there. In the U.S., the waiver of the Jones Act allows ships that otherwise could not trade to move supplies from where they exist to where they are needed. Relaxing specifications can enable movement of products that are needed and otherwise could not be moved. Another example is the use of the Defense Production Act to enable some offshore California production to come into service and get into the market. We are working with the operator of that asset to get it to our El Segundo refinery to meet local needs. California is where the supply pinch is being felt first and most acutely, and it has flowed through to the street. A number of actions have been taken that are very positive in creating supply and flexibility in the system. Actions that can be unhelpful are price caps, which distort signals to use energy efficiently and can discourage the creation of supplies, even if well intended. Export bans can constrain supplies that would otherwise flow to where they are needed and make the situation worse. Taxes on profits generated during periods like this historically do not generate as much revenue as advertised and can send unhelpful signals about future investments, slowing the supply response in the medium term and creating future vulnerabilities. We are engaged with governments around the world to encourage policies that help respond to the situation and to caution about those that may not help. A company like ours, with a large, diverse portfolio, is not overly exposed to a potential bad policy decision in any particular market because of our broad footprint. Thanks, Bob. Operator: We will take our next question from Phillip J. Jungwirth with BMO. Phillip J. Jungwirth: Thanks. A lot is going on in the world right now, but I wanted to ask about U.S. climate litigation because that has been an overhang. We might get some clarity with the Supreme Court taking up the issue with the Colorado case. How much do you think this could settle the question around state versus federal jurisdiction and advance the climate debate in the U.S.? Michael K. Wirth: We are not a party to that litigation, Phil, so I cannot comment too specifically. We are party to another case that was just heard by the Supreme Court and concluded that a case that had been heard in state court really should be removed to federal court. The principles are somewhat analogous. This is a matter for federal courts to decide in our view. In fact, it is truly a matter for elected officials to decide and establish climate policies that appropriately reflect public sentiment and national interests. Cities, counties, and states are not the appropriate places for climate policy to be established nor for climate issues to be subject to litigation. We are hopeful that the case that makes it to the Supreme Court provides some clarity at the federal court level. We have seen mixed views come out. This is a matter that would benefit from clarity from the highest court in the land. Thanks, Phil. Operator: We will take our next question from Nitin Kumar with Mizuho. Nitin Kumar: Back in November, you gave us an update on your exploration program setting up the company beyond 2030, including potential options in new countries. Given the events in the last eight weeks, any change to the pecking order of those priorities or anything you are prosecuting faster to get oil to market? Michael K. Wirth: No, it really has not changed. Exploration is a longer-cycle activity. We have a diverse portfolio; that is valuable in current circumstances. We have some opportunities in the Middle East region, but we also have a number of opportunities outside the Middle East that we are highly interested in. The world needs energy supply long into the future, so we need to continue to look for resource around the world. We are pleased with the portfolio we have built and with new talent that has joined the company. We have a different model for making decisions now and are using new technologies to improve both cycle time and success rates. You can expect those things to continue. We have increased our financial commitment to exploration as well. This is a discussion over the next number of years. If we are not changing activity levels in the Permian in response to the last few weeks of disruption—a place where you do have shorter-term levers—then something like exploration, which is longer cycle, does not get affected by this in the short term. Thank you. Operator: We will take our next question from Jason Daniel Gabelman with TD Cowen. Jason Daniel Gabelman: Thanks for taking my question. You have guided to your equity affiliate distributions being at about 70% of the full-year guide by the end of 2Q. I am assuming some of that is related to higher oil price. Is the relationship between equity distributions and oil price linear? Do you have a rule of thumb to help the market think about the potential upside as a result of what we are seeing? Eimear P. Bonner: Yes, Jason. As Mike talked about, we are coming into the second quarter with very strong momentum in our affiliates—starting with TCO back at full rates and testing the upside of capacity. CPChem is also contributing, and Angola LNG is full. Those are examples of tailwinds and strong momentum. That is why we were able to increase our affiliate distribution guidance today. It is over $2 billion more relative to the first quarter because of the confidence we have in performance. Another thing I would mention is TCO has already changed its distribution schedule and is now giving us dividends monthly. We already have the first in the bank in April. Those actions, coupled with operational momentum, are why the guidance is raised. The guidance is at $60 Brent, so there is a lot of upside depending on how prices unfold. Thanks for the question. Operator: Thank you. We will take our final question from Geoff Jay with Danielle Energy Partners. Geoff Jay: Hi, everyone. A follow-up to Bob Brackett’s question about California specifically. There has been a lot written about its reliance on imports and its low inventory levels. As an operator of refineries in the state, have there been other relief valves? Has the Jones Act helped? Have there been other operational changes to ensure that market is adequately supplied? Michael K. Wirth: You referred to a couple, and I will as well. The ability to bring new production offshore from Platform Hidalgo (Sable field) onshore and make sure that is getting into the California market—California oil through a California pipeline to a California refinery to California customers—was not happening just a few months ago. Same thing with the Jones Act. We can bring crude oil or products from the Gulf Coast that are needed in California. There are special specifications you have to hit, so maybe blend stocks come around. We are very sensitive to our customers in California and the circumstances there. You are well aware of what California’s policies have delivered to the state, which is an oil industry in decline—upstream production and refining—where we have seen a couple of refineries shut down this year. That has constrained supply capability. At a time when the world is feeling these constraints, California is reliant upon supplies from other parts of the world which may be needed to keep their own economies going. It is a real dilemma for the state. We are doing everything we can to meet our supply obligations there, but it does point out the vulnerabilities that have been created in California as a result of decades of poor energy policy. Okay, Katie. It sounds like that was the last person in the queue. Is that correct? Operator: That is correct. No additional questions in queue at this time. Unknown Speaker: I would like to thank everyone for your time today. We appreciate your interest in Chevron Corporation and your participation on today’s call. Please stay safe and healthy. Katie, back to you. Operator: Thank you. This concludes Chevron Corporation's first quarter 2026 earnings conference call. You may now disconnect.